Income Tax Appeal Case ITA No.1308/DEL/2022 Filed Against Non-compliance with CBDT Circular Dismissed

Income Tax Appeal Tribunal Dismisses Appeal in Case ITA No.1308/DEL/2022

The Income Tax Appellate Tribunal in Delhi Bench: B, under the esteemed bench of Shri Chandra Mohan Garg, Judicial Member, and Shri M.Balaganesh, Accountant Member, delivered a pivotal judgement on the 29th of May, 2023, regarding the appeal ITA No.1308/DEL/2022 for the assessment year 2019-20.

Background of the Case

The appeal was filed by the Income Tax Officer (E), Ward-1(3), New Delhi, against the respondent, Centre for Health and Social Justice located in Saket, New Delhi. This case revolves around the alleged non-compliance by the respondent with the provisions of the CBDT Circular No.2/2020 regarding the filing of the Audit Report in Form 10B alongside its income tax return.

Arguments Presented

Representation for the revenue, Shri Vipul Kashyap, Sr.DR, argued that the CIT(A) erred in not appreciating the fact that the assessee filed its Audit Report in Form 10B after the filing of the income tax return, in contravention with the guidelines stipulated by the CBDT Circular No.2/2020. This circular mandates the electronic filing of the audit report before the filing of the return of income, essential for claim exemption under sections 11 and 12 of the Act.

Conversely, the respondent’s representative, Shri S.K. Chaturvedi, CA, contended that the CIT(A) correctly interpreted the laws governing charitable organizations’ revenue and capital expenditure eligibility for the relevant assessment year. He further argued that the Appeal’s focus on the technicality of the sequence of filings overlooks the substance of compliance that has been met.

Judgement and Rationale

The bench critically examined the grounds of the appeal along with the substantial legal interventions and precedences highlighted by the parties. It was observed that despite the technical non-compliance regarding the sequence of filing administrative documents, the essence of compliance with the broader tax exemption provisions under sections 11 and 12 was not undermined by the respondent.

Especially relevant to this conclusion was the reliance on judicial precedents that align with the respondent’s argument – that non-compliance with administrative filing orders, where substantive compliance is evident, should not facilitate the denial of the deduction claims under sections 11 and 12 to trusts or charitable organizations.

Conclusion

After a thorough consideration, the Tribunal found that the appellant’s grounds did not substantiate a compelling basis to overturn the CIT(A)’s finding. The Tribunal thus affirmed the CIT(A)’s decision, directing the Assessing Officer to validate the prerequisites under section 11(1A) accordingly, further solidifying the stance on the matter.

The appeal of the revenue was dismissed, reinforcing the judicial perspective that procedural lapses should not overshadow fulfilment of the substantive legal requirements, particularly in the context of tax exemption claims under sections 11 and 12 for charitable trusts.

Final Notes

This landmark judgment elucidates the principle of substantial compliance over procedural technicalities, ensuring the focus remains not just on the form but the essence of law and justice. The case of ITA No.1308/DEL/2022 stands as a testament to the pragmatic and just approach of the Income Tax Appellate Tribunal.

Income Tax Appeal Case ITA No.1308/DEL/2022 Filed Against Non-compliance with CBDT Circular Dismissed